It’s not surprising, but nonetheless heartening, especially given fourth-quarter volatility and the uncertainty it caused.
Almost all 401k and similar defined contribution plan participants kept contributing to their retirement savings during 2018, according to the Investment Company Institute’s “Defined Contribution Plan Participants’ Activities, 2018.”
The study tracks contributions, withdrawals, and other activity based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans.
The latest recordkeeper data indicate that savers remained committed to saving for their futures by continuing to contribute to their DC plans: only 2.3% of DC plan participants discontinued their contributions during 2018.
Also, withdrawal activity for DC plans remained low in 2018, similar to the activity in 2017.
In 2018, 3.4% of DC plan participants took withdrawals, the same share as in 2017.
Levels of hardship withdrawal activity also remained low, with only 1.6% of DC plan participants taking hardship withdrawals during 2018, compared with 1.7% in 2017.
Asset Allocation
Most DC plan participants stayed the course in their asset allocations, even as stock values moved up over much of the year and then sharply down in the fourth quarter of 2018.
In 2018, 9.7% of DC plan participants changed the asset allocation of their account balances, and 5.1% changed the asset allocation of their contributions.
These levels of reallocation activity are similar to the activity levels in 2017.
DC plan participants’ loan activity remained the same throughout 2018. At the end of December 2018, 16.7% of DC plan participants had plan loans outstanding, the same share as in 2017.
The news follows Fidelity Investments’ latest quarterly analysis of retirement savings trends released May 9, which found the average 401k balance rose to $103,700 during the first three months of this year, an 8% increase from $95,600 in Q4 2018.
The year-over-year average balance is up roughly 1% from $102,900 in Q1 2018.